Verizon buys Frontier Communications in $20 billion deal to boost its fiber optic network.
Verizon Communications Inc. said Thursday the acquisition would also strengthen its foray into artificial intelligence as well as smart connected devices.
Frontier has focused on its fiber network capabilities over the past four years, investing $4.1 billion to modernize and expand its network. More than half of its revenue now comes from fiber products.
Dallas-based Frontier’s price is steep considering its 2.2 million fiber subscribers in 25 states. Verizon has about 7.4 million Fios connections in nine states and Washington, D.C.
Frontier has 7.2 million fiber sites and plans to build an additional 2.8 million fiber sites by the end of 2026.
“The acquisition of Frontier is a strategic decision,” Verizon Chairman and CEO Hans Vestberg said in a prepared statement. “It will build on Verizon’s two decades of leadership at the forefront of fiber and represents an opportunity to become more competitive in more markets across the United States, enhancing our ability to deliver premium offerings to millions more customers on a combined fiber network.”
Some skeptics remain, however, about the potential for a $20 billion acquisition of Verizon.
“The real problem is simply that Frontier’s national fiber coverage of 3.5% (again, based on the FCC’s broadband map as of late 2023) would leave Verizon with a combined fiber footprint that still covers less than 13% of the country, with a path that could potentially only cover about 17% of the country,” wrote Craig Moffett of MoffettNathanson Research. “A fiber footprint covering 17% of the U.S. is not nearly large enough to serve as the basis for a national wireless carrier strategy.”
Verizon, headquartered in New York, will pay $38.50 per Frontier share. The deal is expected to close in about 18 months. It still needs approval from Frontier shareholders.
Shares of Frontier Communications Parents Inc., which was briefly halted Wednesday after a Wall Street Journal story about the deal sent the stock up nearly 40%, fell 9% Thursday. Verizon shares were down slightly.
ABC News
